Kuwait’s economy contracted last year for the first time since 2010 as the country suffered the consequences of the global drop in oil prices, its central bank said Thursday. The country’s total Gross Domestic Product (GDP) shrank 1.6 percent in 2014, mainly because oilgenerated GDP contracted 1.7 percent, the central bank said in its annual economic report.

Analysts have been warning of the effects on oil-dependent countries of the drop of oil prices by more than half since the beginning of last year, to below $50 a barrel. Like other Gulf nations, Kuwait has been struggling to diversify its economy to compensate for oil price fluctuations.

The central bank said non-oil GDP grew 2.1 percent last year. Kuwait’s economy had been recovering after contractions of 7.1 percent in 2009 and 2.4 percent in 2010, according to World Bank figures. In 2013, the economy grew by 1.1 percent, the central bank report said. Kuwait has managed to weather past economic falls, having built up fiscal reserves of some $600 billion.

Kuwait has the fourth-largest Gulf economy after Saudi Arabia, the United Arab Emirates and Qatar. The Gulf state has a native population of 1.3 million and is also home to about 2.9 million foreigners. It pumps around 2.8 million barrels a day.